Monday, November 23, 2020

IRS Commissioner Rettig Disagrees With AICPA on COVID-19 Penalty Relief

According to AccountingTODAY, during a House Ways and Means Oversight Subcommittee hearing, Rep. Judy Chu, D-California, submitted the AICPA letter for the congressional record and asked Rettig to respond to how its backlog of millions of pieces of mail from the pandemic is still affecting taxpayers who are being sent penalty notices and the tax professionals who are trying to help them without an easy way to get through to the IRS.

“The IRS closed its facilities to protect its workforce for several weeks this spring and I recognize that it created a huge backlog of mail that the IRS is still working through,” she said. “But I’m disturbed that the IRS is continuing levy and lien notices while processing that backlog of mail. Taxpayers and businesses who have in fact filed on time are being penalized because the IRS still has not processed their filings.”

She noted that the AICPA letter from Nov. 5 included some “commonsense options that the IRS can implement to alleviate the financial difficulties for these tens of thousands of taxpayers.”

She asked him why the IRS wasn’t setting up a dedicated way to address these concerns. “Commissioner Rettig, my understanding is that the IRS has not established an expedited phone service for tax professionals to dispute the lien and levy notices that are being sent to taxpayers despite the backlog,” she said. “Do you have a current estimate of how large the mail backlog is could you also provide a rationale for not setting up such a process to date and whether we can have such a process?”

Rettig Responded That The IRS Has “An Aggregate Of About 3 Million Pieces Backlogged, Of Which About A Million Are Tax Returns, Which Is Not Unusual For Us.”

As for the AICPA letter, he pointed out that he worked for 36 years on the outside as a tax attorney before joining the IRS. “I’m in touch with thousands of practitioners on the outside, AICPA as well as others, and what they were asking for was for us to go beyond the first-time abate and beyond reasonable cause for individuals with a comment saying first-time abate for a failure to file, failure to pay, failure to estimate penalty, you get an automatic abatement and one of their comments was, well if somebody already has one of those they don’t get a second one but then they default to reasonable cause,” he said. 

“We have procedures in place. The individuals in the Internal Revenue Service were not merely career employees who looked at this, but more than 10 people who came onboard from private practice with similar experience to mine looked at this as well and were not willing to provide an open forum for people, professionals particularly, who might not be addressing their responsibilities during this. So we took a hard look at that and AICPA is aware, as are other practitioners.”

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